President Joe Biden is entering the 2022 midterm elections determined to address what economists call the “supply” problem – there are not enough people looking for jobs or goods to meet the country’s needs.
See Biden’s comments in the player above.
It is also a political issue. The mismatch masked strong growth and 3.9 percent unemployment achieved in Biden’s first year, rates that typically help the president and Democrats in Congress woo voters in midterm elections. This prompted Biden to try to showcase his economic accomplishments while trying to fend off criticism from Republicans that his policies were fueling inflation.
“This is the recovery I promised and hoped for the American people,” the president said Friday. “I am focused on making this recovery strong and sustainable despite Republican obstructionism. Because, you know, I know that even when jobs and family incomes have recovered, families are still experiencing price and cost pressures. ”
Pessimism has surpassed American views of the economy, although objectively the economy is better now than in 2020, just before Biden came to power. The University of Michigan Consumer Sentiment Index is 12.5% lower than a year ago, despite vaccinating people and adding 6.4 million jobs in the past 12 months.
Shoppers are focused on a shortage of cars, bath towels and even cereals. Employers are unable to fill the 10.6 million jobs they advertise as Friday’s employment report showed just 199,000 jobs were created in December. Almost everything is on the rise, with forecasters expecting a 7.1 percent annual gain to appear in inflation reports next Wednesday.
House Republican leader Kevin McCarthy ignored the clear positives in the economy and blamed the administration for all the shortcomings.
“President Biden has been in power for almost a year, and our economy is still missing millions of jobs before the pandemic, consumers are facing inflationary pressures that haven’t been felt in nearly 40 years, and employers continue to grapple with persistent labor shortages,” the report says. message. This is stated in the statement of the Californian MP.
White House officials say that as a policy and political challenge, they are figuring out how to increase the supply of workers and goods this year as the pandemic and supply chain problems persist. They must do this while maintaining consumer and business demand, two pillars of economic power that are a byproduct of last year’s $ 1.9 trillion coronavirus relief package. The administration expects inflation to drop, but is unwilling to idly wait for that to happen.
The administration views the supply factor as the only viable solution because the alternative would be to cut government spending to reduce demand in a way that would harm people’s well-being and their ability to spend and invest.
“We have very high demand in this economy and we are limiting the supply,” said Jared Bernstein, a member of the White House Council of Economic Advisers. “There are two ways to deal with this imbalance. You can hit the demand side and essentially make people poorer so that they don’t have the resources to achieve what they want. Or you can try to expand the offer – that’s what we do. “
Biden has announced a series of initiatives to clear supply chains so container ships can moor faster and larger trucks can hit the road faster with full trailers. Efforts include upgrading ports with $ 1 trillion in infrastructure law money, as well as executive measures to increase the number of commercial truckers and plans to increase domestic production of computer chips.
The White House says it is already improving its supply chain. He issued a memo reporting an increase in inventories and a 39 percent decline since November in the number of shipping containers waiting in ports for nine days or more.
Biden also said his proposed investments in childcare, families, and healthcare, which have stalled in the Senate, will reduce supply constraints, making it easier for more parents to work. Yet his arguments for nearly $ 2 trillion in spending and taxes have failed to convince West Virginia Senator Joe Manchin, a Democratic vote-goer who fears inflation and wants to demand that families receiving the child tax credit have jobs.
The continuing threat of a pandemic is also at the root of the shortage of workers. The initial wave in 2020, followed by delta options and now the omicron, made it harder for people to return to work or learn new professions. This created a shortage of workers and exacerbated supply chain problems and inflation.
“The virus remains the biggest problem in the economy today,” said Aaron Sojourner, an economist at the University of Minnesota. “Millions of employees miss work every week because they have symptoms of COVID or are caring for someone with symptoms, and the unvaccinated are 2.4 times more likely to miss work.”
Sojourner calculated that only 39 percent of working-age Americans are fully vaccinated and boosted. There remain 36% of those who need revaccination and 25% of those who have never been fully vaccinated.
Heather Boushey, also a member of the White House Council of Economic Advisers, said the pandemic has caused massive unemployment and turmoil for families and businesses. But she said supply chain problems were more difficult to solve due to their global nature and the fact that they are linked to some long-standing problems that are not related to the coronavirus.
“It’s not just in the United States – it’s a global problem,” Boushi said.
Friday’s employment report showed how difficult it can be to increase the number of job seekers, said Tyler Goodspeed, an economics adviser to the Trump administration who is currently a research fellow at Stanford University’s Hoover Institution.
The report came out before the likely impact of the omicronic variant of the coronavirus, which led to the closure of schools and some businesses. However, it showed that the percentage of people in the workforce has not increased significantly, a sign that the supply of available jobs is limited, although the US still lacks 3.6 million jobs to pre-pandemic levels. There has also been a lack of business investment since the pandemic, making it difficult to increase supplies to the economy, Goodspeed said.
“It’s hard for me to understand how supply will match demand in 2022,” he said.